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ENEV - Standing Committee

Energy, the Environment and Natural Resources


Proceedings of the Standing Senate Committee on
Energy, the Environment and Natural Resources

Issue No. 6 - Evidence - April 21, 2016

OTTAWA, Thursday, April 21, 2016

The Standing Senate Committee on Energy, the Environment and Natural Resources met this day at 8:43 a.m. to study the effects of transitioning to a low carbon economy.

Senator Grant Mitchell (Deputy Chair) in the chair.


The Deputy Chair: Welcome to this meeting of the Standing Senate Committee on Energy, the Environment and Natural Resources.


My name is Grant Mitchell. I represent the province of Alberta in the Senate and I am the committee's deputy chair. The committee's chair, Senator Richard Neufeld, sends his apologies as he was unable to attend today's meeting.


I would like to welcome honourable senators, any members of the public with us in the room and viewers all across the country who are watching on television. As a reminder to those watching, these Senate committee hearings are open to the public and also available via webcast on the Senate's website. You may also find more information on the schedule of witnesses on the website under "Senate Committees.''

I would like to introduce our staff, beginning with the clerk, on my left, Lynn Gordon, and our two Library of Parliament analysts: on my immediate right, Marc LeBlanc, and beside him, Sam Banks.

I would now ask senators around the table to introduce themselves, beginning with my colleague to my right.

Senator MacDonald: Michael MacDonald, from Nova Scotia.


Senator Ringuette: I am Pierrette Ringuette from New Brunswick.


Senator Mockler: Percy Mockler from New Brunswick.


Senator Massicotte: I am Paul Massicotte from Quebec.


The Deputy Chair: Thank you.

Today marks our fifth meeting for our study on the effects of transitioning to a low-carbon economy as required to meet the Government of Canada's announced targets for greenhouse gas emission reductions.

We have with us today John Barrett, the President and Chief Executive Officer of the Canadian Nuclear Association. Welcome, Mr. Barrett. We're very pleased to have you with us. Please proceed with your opening remarks after which, as always, we will have a question-and-answer period.

John Barrett, President and Chief Executive Officer, Canadian Nuclear Association: Thank you very much, Mr. Chairman. Good morning to the honourable senators.

The Canadian Nuclear Association is a national industry association founded in 1960 to raise awareness of the many benefits that civil nuclear technology brings to Canadians.

Those benefits are around us every day, in the form of life-saving medical diagnosis and treatment, sterile medical supplies, safer food, greater engineering and manufacturing quality, stronger materials and better consumer products, and, not least, the benefit of 20 per cent of Canada's clean electricity that comes from nuclear power.

Cutting greenhouse gas emissions is a tough job. Environment and Climate Change Canada projects Canada's GHG emissions in 2030 will be 55 per cent above the previous government's target. We can be sure the current government will set much more ambitious GHG emissions-reducing targets. As Environment Minister Catherine McKenna said, ". . . more needs to be done to close the gap between where we are today and where we need to be.''

Aspirations are high, Mr. Chairman. That is why all low-carbon energy technologies must be on the table and given a fair hearing, not only for what they promise tomorrow but, more importantly, for what they deliver today, because the carbon challenge is immediate. We cannot afford to cherry-pick some technologies over others because of prejudices and preferences.

The Canadian Nuclear Association would like to offer some insights into how nuclear technology can help the government achieve its ambitious clean energy and climate change objectives on the way to a low-carbon economy.

First, nuclear power generates about 15 per cent of all of Canada's electricity and, as I mentioned earlier, 20 per cent of its low-carbon clean electricity. This means that nuclear's capacity to deliver low-carbon energy is a fact. It provides approximately 60 per cent, on any given day, of Ontario's clean electricity needs. Without this contribution, Ontario would not have one of the best provincial records for clean electricity generation. It wouldn't have had the generating capacity to substitute clean energy for coal. Without nuclear power, dirty fossil-fueled electricity would still be in effect, polluting the air of the Greater Toronto Area and southern Ontario. Ontario's leadership on clean energy would have been jeopardized.

Also, from another perspective, uranium from Cameco, Canada's largest uranium mining company, powers one out of every 18 homes in the United States and one out of every 10 in Canada. This represents an enormous amount of avoided GHG emissions.

As it stands, Ontario has announced the biggest single investment in clean energy in North America and most of the world, too, except perhaps China: $25 billion towards the refurbishment of 10 reactors, which will guarantee a significant supply of clean electricity out to 2040 and beyond. This gives not just Ontario but the rest of Canada confidence that the 20 per cent of clean electricity supplied by nuclear power will continue to be a foundation stone — an endowment — for Canada's evolving low-carbon economy.

Second, nuclear technology supports the increasing integration of other low-carbon options, such as wind and solar, into the grid, as the Ontario electricity system shows. In future, innovation at nuclear power plants will help this baseload source become more "load following,'' with the capacity to ramp up and down in accordance with fluctuating supply from renewable sources.

Given that today, and for the foreseeable future, wind and solar account for extremely modest contributions to Ontario's energy needs, the nuclear contribution will remain essential. Reliability of renewable sources and sufficiency of storage are not here today; they may take some time to reach nuclear's 60 per cent share, if at all.

Third, nuclear energy in Ontario can play a very important role in supporting the various collaborative arrangements agreed among the three North American energy ministers at their meeting in Winnipeg in February 2016, and between President Obama and Prime Minister Trudeau in Washington in March 2016. Nuclear can combine with other sources — for example, hydro — to provide clean electricity across provincial borders and to other jurisdictions, such as the northeastern United States. Should American demand for clean electricity ramp up, Canadian capacity would help to supply these markets, with Ontario exporting quantities of clean energy generated by nuclear and hydro, while Manitoba and Quebec could draw on their hydro capacity.

Fourth, nuclear construction, operations and refurbishments provide good jobs and economic benefits — the supply chains are Canadian, and the knowledge requirements are high. Studies by the Canadian Manufacturers and Exporters, by KPMG and by others have demonstrated the important positive economic impact in local Ontario communities, as well as right across the province. The fuel comes from Canadian mines, mainly in Saskatchewan. It is refined and fabricated into fuel bundles in Ontario. This, along with building, refurbishing, operating and servicing brings made-in-Canada economic success to Canada, unlike other sources of energy technology where the manufacture and resulting income and jobs benefits take place offshore.

Fifth, nuclear technology plays a role in other important aspects of the government's clean energy policies, particularly on the international level. No other Canadian source of clean energy has the same international impact as nuclear. For a start, Canada's nuclear technology expertise gives credibility and influence to Canada's policies on nuclear nonproliferation, safety and security. It is a strategic asset for the country's foreign policy, enabling Canada to participate in and have its voice heard on a range of international security issues, from Iran's nuclear program to UN expert meetings on arms control and disarmament verification, and the cut-off of fissile material.

In addition, the export and servicing of Canada's CANDU nuclear technology abroad is an important element in bilateral relationships. Canada's relations with countries utilizing Canadian nuclear technology — China, India, South Korea, Pakistan, Argentina, Romania — are underpinned by the long-term nature of nuclear cooperation. Canada's nuclear reactor technology and uranium exports have, over the last 30 years, contributed globally to the avoidance of at least a billion tonnes of CO2 in displacing fossil fuel sources. This is a unique and ongoing contribution to global climate change mitigation that no other Canadian energy source can claim.

Finally, there are two further areas of the federal government's clean energy goals that could be successfully achieved with support from nuclear technology.

One is the possibility of bringing electricity and energy to remote indigenous peoples' communities, whether in Canada's North or in places far off the transmission grid. These communities need non-fossil energy resources sufficient to power electricity needs as well as water purification and public health needs. A very small, modular nuclear reactor, inherently safe and simple to operate, would be a real option. That possibility is coming closer as the SMR technology develops around the world and right here in Canada.

The second is also an outcome of the small, modular reactor development, this time in the resource-extraction sector. Much of mining operations, current and potential, occurs in areas far away from electricity transmission lines. Similarly, the oil sands industry relies on producing vast amounts of steam to use in the extraction of bitumen. Today, the enormous energy required by the industry is provided by fossil fuel generation, resulting in the highest levels of GHG emissions in the whole country. Were the steam produced by clean electricity from an on-site SMR, the situation would be dramatically changed, and Canada's emissions reduction targets would become more achievable. The oil sands would become the "clean sands.''

A final point concerns uranium mining. By taking this element out of the ground, refining it and placing pellets of it in a nuclear reactor, the industry is bringing cobalt-60 to the world. It is bringing medical imaging and cancer treatment to millions of patients. It is allowing researchers to delve deeply into sub-molecular structures of living tissue, of new composite materials or in the soundness of rotor blades in jet engines. These are just some of the non- destructive testing applications of nuclear technology that bring benefits to Canadians and people the world over. Our leading uranium miner, Cameco, is the largest industrial employer of indigenous people in Canada.

In all of these areas described above — whether in uranium mining, in refurbishment of Ontario's reactors, in applications to energy-consuming applications such as remote communities or resource extraction — the single feature that unites them all is innovation. To this end, the industry is putting the finishing touches on a "nuclear innovation roadmap'' that sets out the aspirations of the industry in providing clean energy to Canada.

To expedite the role and contribution of the nuclear industry to Canada's low-carbon future, we propose the establishment of a nuclear innovation council. This forum would have participation by industry, the federal government and provincial governments. The goal of a nuclear innovation council could be, first, to bring together key stakeholders to align the nuclear industry's innovation roadmap to the Canadian Energy Strategy and to a pan- Canadian framework for clean growth and climate change, as outlined in the Vancouver Declaration. It could also align to Canada's national climate change framework and investments in clean energy innovation.

Another function of a council would be to discuss the roadmap's priorities and enabling facilities, including funding models, sources and partnerships.

Furthermore, a council could be part of a national "climate change innovation council.'' Such a council would bring together innovative technologies from diverse low-carbon energy sources and would help to give strategic direction to federal and provincial funding and investments instruments — for example, the federal government's Mission Innovation and Canada's new Low Carbon Economy Trust.

Mr. Chairman and members of the committee, this is a time when we need all hands on deck in meeting national and global GHG targets. Let's not overlook what Canada's nuclear technology brings — in reality as well as potentially — in, as Minister McKenna said, "closing the gap between where we are today and where we want to be.''

Thank you. I'm very happy to answer any questions you may have or explore in more detail the many innovative developments in Canada's nuclear technology that contribute to our country's clean energy and its prosperity.

The Deputy Chair: Thank you very much, Mr. Barrett. We will begin with questions.

Senator Massicotte: Thank you, Mr. Barrett, for being with us today.

A couple of issues: You're probably in a position to give us an update. You referred to the CANDU reactor. Canadians have been very proud of that. Unfortunately, the last time I checked, it's been many years since we've sold one. It's now been privatized, since about two years ago, by SNC-Lavalin. How is that coming long? Have we sold any new reactors in one sector, and why or why not?

Mr. Barrett: Just to give the committee a bit of an update, as the senator requested, SNC-Lavalin Nuclear has the CANDU technology and is involved in a number of discussions that have export potential. As far as I understand it, these discussions are coming very close, and we're hoping that, in 2016, I can be the bearer of good news on that side of the equation.

For example, SNC-Lavalin is in discussion with the U.K., because the United Kingdom has plutonium from its civil nuclear-power operations that have stockpiled. The CANDU technology is unique. Unlike any other reactor technology, it can use different types of fuel sources. If you take this plutonium and want to get rid of it, you chemically turn it into a mixed oxide and that becomes a type of fuel that can be used by a CANDU reactor, so you're extracting more energy out of what has been stockpiled as waste, and you're disarming, so to speak, a kind of hazardous material in the form of plutonium. That is the discussion that's ongoing, and it's over to the U.K. now to make the final decisions and to select the technology. CANDU Energy and SNC-Lavalin are very much in that running.

If I turn to Romania, Romania has made the decision. They already have two CANDU reactors. They're very happy with them, and they want to add two more. This will be important because that will then reduce the need for a country like Romania to use oil or fossil fuels. There's a kind of a contribution there to avoiding GHGs and emissions, this time in Romania.

They want to add two more, and here there's a partnership with China. China is involved in financing the deal and taking the load of the financial risk. This is where China is now, more and more, into the export markets. But the Romanians are very happy with CANDU technology and the Canada brand, so the situation right now is a kind of trilateral arrangement, so to speak, where Romania has to make its decisions. That's the national decision to go ahead. They go ahead. They will be talking with the Chinese on the financing. The CANDU technology and the CANDU sort of heart, which is the key, the intellectual property that belongs in the technology, will be put forward by SNC-Lavalin.

That will be an important deal because — and this is a key point — the Chinese government is looking for the involvement of the Canadian government. It's a political thing, but it's a financial thing. They want to see the Canadian government stand behind the technology, and they also would like to see the guarantee of certain export credits, as we've done before, by the way. When the first two Romanian reactors were sold 15 years ago, the Canadian government put a loan guarantee that actually worked out very well. We got the premiums. The deal worked perfectly well, and that brought jobs and employment back to Canada. This is the same situation. If the Canadian government uses the Canada account, which is there for backstopping, provides a loan guarantee in the same kind of arrangement as before, and it looks like it's a good risk to take, then that will really help seal the deal.

With that, I've heard SNC-Lavalin say that about a billion dollars' worth of jobs can be brought back to the Canadian supply chain. If not, it will be done by someone else.

Senator Massicotte: Use the Canada account to guarantee the loan. Loan from whom?

Mr. Barrett: This is a sovereign guarantee. It's put forward so that the Canadian exporters can get into the game and be part of that supply. For the pure economics of the deal, I'd have to turn to EDC people, the Export Development Corporation, or others.

Senator Massicotte: EDC guarantees payment when they sell a service. Is that what you're recommending? Is there any form of subsidy in those words? That's where I'm getting at.

Mr. Barrett: No. As far as I understand it — and I have to say, I'm not the international finance expert on this — the sovereign guarantee is like an insurance that the payments will be met by the players inside, the Canadian players there. As long as the payments are met and the supply is produced and the arrangement goes well, then the guarantee is never used.

Senator Massicotte: So it's a guarantee that the Romanian government pays SNC-Lavalin for the purchase of the reactor?

Mr. Barrett: Essentially, but I would want to get more expert —

Senator Massicotte: Another question: You referred, in your presentation today, to SMR, the Small Modular Reactor nuclear facility. Our own committee looked into that probably a year ago, where Russia had a proposal. In Canada, we have a significant challenge for Northern communities. They all basically get electricity from diesel, to a large degree, especially the Nunavik area. Maybe nuclear had a solution there. But, when we looked into that, it was still not there. It was complicated to transport, complicated to set up, and it needed, basically, technical people that the North does not have. Are you saying that the technology is now available to Indigenous people and also to the mining industry?

Mr. Barrett: I wouldn't say it's available just today, but I would say the following: My observations have led me to realize that this SMR technology is happening almost across the world. Korea is developing one. China is developing one. You mentioned Russia. Indeed, Russia is there, as are the United States and the U.K. It is seen as one of the viable technologies that will come to pass. The U.K. is looking into how it can be deployed along their coasts, but near population centres, to provide heating as well as local electricity needs. They've gone well down the track in thinking this through.

We're in a situation right now where you have a very serious development of the idea, looking at its applications in a number of jurisdictions. We have the Canadian one that you mentioned, the remote communities, but there are other possibilities. Small countries or countries that are looking to join the ranks of nuclear power for civil electricity needs may wish to see a small reactor as their first step, whether it be in Malaysia or Indonesia and Vietnam. These countries are looking into that possibility.

Senator Massicotte: How small is small, roughly?

Mr. Barrett: We say small, and then we say very small, because the IAEA, the International Atomic Energy Agency, uses a rough standard of about 300 megawatts. The power generation of a CANDU reactor is anywhere from 800 to 900 megawatts. You can get reactors up to 1,200 and 1,300. Those are the big ones. The small one is about 300. But it can be dialed down to even smaller, so you could be talking about a 5-megawatt reactor.

The main point here for the committee is that, as I say, the technology is moving ahead. A number of proponents and technology developers are approaching Canadian Nuclear Laboratories at Chalk River to utilize their testing facilities to start the prototype development, to go from the paper design into building something that then can be tested, because it's only through the testing that you get to the licensing, et cetera. There's a bit of a horizon there. That's the way you go through the safety procedures, et cetera.

Senator Massicotte: I have two more short questions, and I'm going to be cut off. If you give me short answers, I won't get punished.

As to the nuclear innovation council, you're recommending it's time to get on with it. I would say, "Get on with it.'' Why do you want the government at the table? To me, that's simply a way that you want government to pay for something. The government won't provide for innovation. It's industry that's going to provide for these things. So why not get on with it?

Mr. Barrett: One of the reasons is that, in the industry, there have been some changes. You mentioned SNC- Lavalin. The CANDU reactor technology has been privatized over the last three or four years. Atomic Energy of Canada, Chalk River, has been restructured and is now being operated in a different model, a government-owned but contractor-operated model, which has just come into effect last year.

My point is that there have been some changes in the way that the nuclear industry has been structured in some of its main components. Now is the time to look forward. We've been working on the industry side to put forward this roadmap I mentioned, and it's almost finished. When you talk about innovation, you want to see what the facilities are that we have to conduct innovation, because you need that kind of laboratory and specialized types of facilities, some of which we have in Canada, some of which we might need. For example, some parts of our industry can see the advantage of having a research reactor that would follow on from the national research reactor at Chalk River, which is being shut down.

You need to have a discussion of what kind of reactor, not exactly like the NRU, but some different kind with different possibilities and capabilities. That's being discussed. That's one thing. We're closed to getting finalized on putting that forward.

The second element is that, where industry is prepared to come to the table with financing, all other countries that are technology developers and exporters and providers, such as we are in Canada with CANDU technology — there are about seven or eight who are putting forward their own technology — have a government involvement.

Senator Massicotte: Government money, in other words?

Mr. Barrett: In some areas. But it is seen as a contribution to the technology that is vital to a modern economy. I mentioned some of the applications that come from the technology. There is a role.

I'll just end with this: In Canada, we see the interest of some of the provinces — in particular, Ontario and the Minister of Research and Innovation in Ontario, Minister Moridi. We've been talking because they see the importance of the innovation in Ontario, and they've had experience in the public-private partnership things. There's another model.

Senator Massicotte: Where is nuclear at, CANDU? What's the cost per kilowatt hour compared to hydro? How competitive is it?

Mr. Barrett: In Ontario, because that's the best basis to use because we have the figures pretty clearly, Bruce Power is producing about 60 per cent, so 30 per cent of the nuclear power comes from Bruce Power, and has always gone on their public announcements at the basis of about 6 cents per kilowatt hour. That's what they get for producing the electricity.

Senator Massicotte: Is that a fair comparison? Bruce Power was privatized some years ago and bought at far less than replacement cost. How about a new nuclear reactor today — a new CANDU plant somewhere? What is the cost per kilowatt hour?

Mr. Barrett: I would have to come back to you with that and try to do forecasting with those who are better at that because it takes a lot of assumptions —

Senator Massicotte: What's happening in other countries?

Mr. Barrett: The rough rule of thumb is that nuclear is on the same level as wind, so about that.

Senator Massicotte: Which is?

Mr. Barrett: I've heard that wind costs 11 cents per kilowatt hour, nuclear at 8 cents per kilowatt hour, solar at 18 or so per kilowatt hour, and natural gas at about 11 cents per kilowatt hour. It is very competitive.

Senator Massicotte: And hydro?

Mr. Barrett: Hydro is about 6 or 7 cents per kilowatt hour. Those are rough figures. If you wanted to use them, I would want to come back to you.

The Chair: You could come back to us with that. Senator Massicotte asked a very good question. Bruce is old cost. What is the next new plant cost? To further that analysis, hydro is old cost. What is the comparison between a new hydro plant and a new nuclear plant and, if there were to be one, a new coal plant? Could you give us an idea of the comparisons, at least on the nuclear side?

Mr. Barrett: I recall on the Bruce side when the announcement came in Ontario in December, they looked at a price a bit higher, towards 8 cents per kilowatt hour, going forward with the refurbishment program. That's a cost going out some ways.

Senator Ringuette: Welcome, Mr. Barrett. Of course, three years ago, SNC-Lavalin was paid by the federal government to assume the CANDU reactor issue. We were told at the time that the reason behind all of this was to remove the federal government's responsibility in financing future sales and so forth. This morning, you're telling us that's not really the case because EDC is requested to help finance SNC-Lavalin's CANDU sale in Europe. The entire premise of the transaction three years ago has not occurred.

To look into your recommendation of funding for a nuclear innovation council, what is the current amount of research and innovation investment by SNC-Lavalin in the nuclear section of its operation?

Mr. Barrett: On the last question, I would have to check with SNC-Lavalin because I don't have the figures in front of me. I would have to come back to the committee on that.

The important point here is that the export credit guarantees are not financing it; that's providing a guarantee for it. That's part of doing international business. I don't think it's a direct subsidy, if you're thinking of it that way. We should be a little careful. I would recommend that the EDC folks come to the table to explain that element. I take your point.

Senator Ringuette: I don't want to interrupt, but I want to clarify the issue. The Government of Canada has never, per se, financed a CANDU reactor. It has done so in some portion, and I believe it was the first CANDU in China. Maybe at that time there was federal government financing.

Your statement also was about the competition in the world for nuclear. We've known that, in the U.S., GE has always been backed financially by the U.S. government for their sales. The arguments are still there.

Sticking with the innovation in nuclear, these SMR developments are very important. You mentioned that the U.K. is very active and so forth. Two years ago, understandably, this committee saw the need in Canada. How much is SNC- Lavalin investing in research and development of an SMR product right now?

Mr. Barrett: My understanding, and I would have to check again with SNC-Lavalin because I'm not always privy to their detailed R&D programs, is that like any company, they're watching the space very closely. They may be considering partnering with other companies, but I don't see that they're pushing a product. We see some Canadian firms bringing different technologies for SNR to the table, and there are American firms too.

What we really see for Canada is more of a partnership in development of these rather than taking it from zero right through to the final development side of it. There's a lot going on where industries can partner with others in developing this kind of reactor.

Senator Ringuette: I have one more question regarding a nuclear innovation council. What kind of federal funding is the council looking for?

Mr. Barrett: Any detailed financial elements would remain to be determined by the council. The most important thing is to bring the key players to the table. We don't have a forum at the moment where industry can talk with the federal government practitioners and policy-makers in the area of industrial innovation, technology, et cetera, where they may have a particular interest in the economic dimensions and spin-offs from a technology that can be brought to the table.

At the same time, some provinces, and I mentioned Ontario where the industry is very important to the economic circumstances, want to know the future of the industry. There are some innovative ideas and we can talk about some of them. The province, as we've heard, is willing to put some money on the table, but they won't put all of it because they want to hear what industry has to say. They ask: "Can we work out a funding model where everyone has a piece?'' and "Where's the federal government on this?'' It's that kind of get together in the forum and talk this through; and we don't have that at the moment. A lot of it would be innovation-oriented.

Senator Ringuette: I stand by my argument of three years ago against giving Canada's nuclear industry to the private sector.

Senator MacDonald: I just want to put something on the record. Senator Massicotte asked about the relative cost of kilowatt hours. The information we have here for Ontario is 50 cents per kilowatt hour solar; 13.5 for wind; 11 for gas; 5.6 for nuclear; and 3.5 for hydro. Hydro and nuclear are fairly competitive with each other. Of course, hydro is more destructive on the front end when you're preparing any hydro plant.

I guess my first question is about the way Canada has handled the CANDU reactor program over the past number of decades. We're talking about exporting it and all the spinoff and creation of jobs in Canada, yet we're not building new ones in Canada.

Nuclear power is great power. We have a proven track record, and obviously the technology is only going to become more advanced, efficient and safe. Has the Canadian nuclear industry done a good job at convincing governments in Canada that they should be putting more resources into nuclear power? We want to export this technology, but we're not prepared to build new plants ourselves.

Mr. Barrett: That's a very good question. Let's start with the at-home situation.

Part of that is a reflection of demand. The Ontario government, in 2010, was looking at the possibility of adding a new reactor on the Darlington site, but at that time the effect of the recession of 2008 and 2009 was starting to kick in. When they looked at it and tried to project, as they're always doing, what the demand will be going forward, they saw more of a flat line than a ramp up. As a result, the Ontario government made the decision that refurbishment of the existing reactors to keep them going out for another 30 years or more would be the best decision, at the moment, given the demand framework. So that's one element.

The second is the cheaper cost of natural gas for heating. This has had a real effect in the United States because there, the relatively low cost that we're experiencing — it's a volatile pricing area, as we all know. We've seen high gas prices and low gas prices on natural gas for heating.

Utilities in the U.S. move to what is the cheapest fuel or situation they see at that moment. As a result, when the natural gas price is very low, it creates difficulties for the nuclear industry because the utilities there provide a sort of steady base load of continuous power. It's being affected by that, so the markets are difficult.

Now, there is a situation we can envisage in the future where they may need more. People are talking now about collaboration or cooperation with the United States on clean electricity, and they don't necessarily have the generating sources because they use a lot of coal and they have to use natural gas. If they turn to clean electricity, then Canada's hydro and nuclear industries are sitting there with a possible supply market, and there might be a reason, with ramped up demand, that a new reactor would come into play.

Internationally, I think the one basic answer I would give is that when the deals are being made, Korea is now supplying reactors to the United Arab Emirates. The Canadian side — CANDU Energy — had a possibility in Jordan, but the Russians got that contract. China is about to enter the export market, and you can bet, on all of those, that there are national government subsidies going into them.

How do we play on that field? One way we can play is we have a unique technology that doesn't need enrichment, and the second is a really innovative technology that can take the fuel that's gone through a light water reactor and use it as fuel again through a CANDU. This is why China is lining up to buy a CANDU reactor for every three or four light water reactors they have. I didn't mention it, but that is another area where we may have an interesting sale and export. It's in that uniqueness.

We do also need, as all of these other vendor companies do, the presence of the Government of Canada. It's a relationship you're building. That's what I was trying to say in my remarks. You need the government to say, "We back this.'' We may not be spending huge amounts financially to support it, but politically it is an important technology and it's part of our relationship so let's engage.

That's why, with Argentina, with India in the future, I'm sure, and China now, these are parts of our fundamental relationship.

Senator MacDonald: But again, if I may, this is all about exporting the technology and achieving export markets.

Getting back to Ontario: You talked about demand being relatively flat, but they're removing all kinds of generation out of the grid, like all the coal generation. You mentioned natural gas, but they cancelled two natural gas plants and went to hydro and solar, and the cost of electricity has gone through the roof. The Auditor General said it was $30 billion and some that we overpaid for power.

I don't understand why we aren't building more nuclear plants in the country. Where does the fault lay? Is it with the politicians or the Canadian nuclear industry? Is it a combination of both? This is clean energy. It is a proven technology.

Mr. Barrett: That is a really good, deep question, and it's one that I find I wrestle with every day. You see the clean energy potential, and you see the technology that's known and the safety records. There have been no fatalities in any Canadian nuclear facility over the 60 years that we've had this technology. And yet there are elements of the public that say, "This is not what we want. We want something else.''

In the moment when we're all wrestling with the climate change challenge, I mention in my remarks that all technologies that can offer something should be looked at. Let's be analytical about this. Let's be practical. As you mentioned, senator, that is one of them, and yet it doesn't get mentioned often.

If I say 60 per cent of Ontario's electricity is nuclear, I'll bet 9 out of 10 people walking down the street would say, "You're kidding. I thought it was 3 per cent,'' or this or that. People don't realize. They don't know this.

How do you bring it to their attention? We try, but the connection through to policy and support doesn't quite work the way it should. They say, "Okay, that's interesting, but let's have more renewables.'' Well, fine, you can have more renewables, but you can't, at this point, handle the whole base load, which is where the renewable technologies are. So be practical: Continue with the base load that nuclear maintains and build in renewables, as we are doing in Ontario and some other jurisdictions internationally do. We have a good model there and shows how they come together in an effective way, because there will be cost implications. You mentioned what the cost of nuclear electricity is in Ontario. The others are higher, so if you want to make that integration, people will have to pay more because you're not getting the most economical source.

Senator MacDonald: We're told there are 45 reactor designs currently under development around the world. Is Canada involved in developing one of these independently? If we're going to be developing nuclear reactors, I prefer to have Canadian scientists and Canadian technology and Canadian safety standards to be applied, because we have a proven track record. Where do we fit right now in the evolution of this? How far down the road are we in the evolution of these small modular reactors?

Mr. Barrett: I certainly agree about the Canadian standard and brand because it's so important to our industry, but also our international standing in the nuclear field. People look to Canada because of that, so we should capitalize on it.

In the small reactors, some of this technology goes back a long way. It's the technology that put nuclear power on submarines and aircraft carriers. The U.S and British navies know this; they've dealt with this. It's a variation of that.

The question, really, is: How do you bring it to market in a commercial application? When it comes to that, I've been to conferences and heard from the different vendors, from Westinghouse right through to, in Canada, Terrestrial Energy, which is working on what they call a molten salt reactor. It's a very innovative type of moderator and fuel for the reactor, and we can provide information on that separately,

There are different sorts of design types. They all have to go through the testing phase, but the problem and the challenge is, where is the market? If you say we have 10 remote communities that could really benefit from this, then I would say that in the next 10-year frame, we will start to see the actual deployment of some reactors. They will get through the licensing and the proving, if not in Canada, somewhere else in the world.

These vendors, and some governments are very active, are watching for the first country or industry that is able to produce these, license them, get the quality controls, the assurances and confidence, and start to find the market. As that market opens up, they start to see it multiply and multiply, because it goes worldwide at that point. That's why all these countries are in it. It's not for their own national deployment; they're looking around the world and saying, "This is going to be the future.''

So how do we get on it? There are some technology designers who are looking to bring a design to the table. Some of them are talking with Chalk River and other parts of industry as to what are the next steps. They're talking also with the Canadian Nuclear Safety Commission, the regulator, to start the process, because the regulator is now dealing with something a bit different, and they need to get into the act.

The answer to your question is that people will sit and talk about how these reactors can bring clean energy, how they can be operated simply and provide power to communities that just don't have it. And they would replace fossil fuels. The technology providers are convinced that it's absolutely safe, et cetera.

But how do you kick-start the commercial orders, such that the manufacturer says, "I can't just do three or four of these, because it's not worth it, unless the government or someone pays me. If I make a commercial proposition, I want to know where number 20 is on the order books — number 50, number 100.'' It's the first of a kind, end-of-a-kind type of discussion that you hear. You get the feeling that they're poised, and they're bringing the technology to the market, but they're looking for a breakthrough. There's a feeling that whoever gets that starts to move into a big market.

The Deputy Chair: Senators are lining up to ask questions. I don't want to get into supplementaries.

Senator Mockler: Mr. Chair, in the spirit of cooperation, I would love to hear my colleague.

The Deputy Chair: I know, but I'm asking you to cooperate with the chair, so please proceed.

Mr. Barrett: I apologize. I get into the subject matter and the questions.

The Deputy Chair: It's wonderful. I hate to have to push, but I do. Senator Mockler, please.

Senator Mockler: I'm a great supporter of CANDU. One of the biggest success stories of CANDU is in our province of New Brunswick.

There are a few questions I'd like to ask about the role of governments — when I say "governments,'' it's not only the federal government but it's also provincial governments — on CANDU. I witnessed it when I was Minister of Intergovernmental Affairs for the Province of New Brunswick in 2004 and 2006. For Romania, I was there when the prime ministers of the day were there, and they talked about the role of government and CANDU.

Look at where CANDU is. Point Lepreau was established in 1981, and it commenced construction in 1972, 1973, 1974, and it operated. It's the first CANDU nuclear reactor that sold electricity to the U.S. When we look at the CANDU performance, it was also the only one built in Atlantic Canada.

There are other CANDUs in Argentina, South Korea, India, Pakistan, Romania and China. On the Romanian side, the Canadian government played an important role. I'm looking at 2004. I know that prior to 2004, in the 1990s, it played an important role, being at the table to demonstrate and to give stability, security and to create economic certainty, because we're competing not with Prince Edward Island but worldwide when we look at the nuclear industry.

My question to you is this: Atomic Energy of Canada Limited, which is a federal Crown corporation, has a contractual arrangement with the Canadian National Energy Alliance for the management and operation of the Canadian Nuclear Laboratories. Could you apprise the committee on what your relationship is with those? I know the role SNC-Lavalin plays and the role that the Canadian National Energy Alliance plays. What are your comments on that?

Mr. Barrett: The AECL has historically been the centre and the centrepiece of Canadian nuclear technology and development, from the neutron-beam-scattering experiments that take place with the big research reactor up at Chalk River right through to the building of the CANDU reactors, as you said.

Then came the previous government's decision to restructure and to spin off — which SNC-Lavalin eventually bought — the reactor division, largely based in Toronto and Mississauga. Then there are the Chalk River labs.

The next step of that restructuring was to make AECL still the kind of holding company, very small now in numbers; if you will, the "crown'' is still at Chalk River in the form of AECL, but it's much smaller. As you mentioned, senator, the new arrangement is that the government owns the facilities, but a contractor comes in to run them. In comes the CNEA you mentioned, out of a number of bidders. They were all evaluated, and that was the winning consortium.

They've been in since September of last year to get their feet on the ground to assess things. They have a mandate to fulfill a number of functions for the government. They also conduct work in innovative areas, but the key thing is that they're working more on a commercial basis.

The one thing I would point out is that they're bringing business development into their work. They're looking at customers outside of the usual customers. I know they want to be able to provide laboratory and facility services at the appropriate costs to vendors and technology providers that have boiling water reactors, which are found in the U.K., the United States and elsewhere — or light water reactors — so different related nuclear technologies. They're in business.

This is going to be a very good step, because I think it combines the best of both. We have a facility that is internationally known. When I was ambassador to the International Atomic Energy Agency in Vienna, so many people who passed through there from different governments and within the agency itself know about Chalk River. It's a real jewel in the crown because of the talent there. I've heard the people who come in on the consortium — the CNA — said, "Goodness me, there's a lot of skill and talent out in Chalk River.''

What they want to do is turn this now into building the business — using the facilities for some real revenue return, as well as fulfilling the Government of Canada's own mandate. There's the situation now. It's still early days, but it's positive.

Senator Mockler: Should New Brunswick build a second nuclear reactor?

Mr. Barrett: Of course. At the moment, the reactor that you mentioned at Point Lepreau is providing about one- third of New Brunswick's power. The future, as you mentioned, could also involve more exports to the United States. Again, it's this looking forward to the clean energy demands that we'll hear about not only more in Canada but also in the United States. Are we prepared to supply that, and do we have the capacity to supply it? That might be part of the equation of whether a second reactor could be produced there in New Brunswick.

I do know that there have been discussions previously; it's not a brand-new idea, and that's a good thing. It's not a brand new idea to add another reactor. I think, then, it's up to the New Brunswick folks to look at that and see where they want to go on the clean energy front, but there is some potential. I think another reactor could be part of that.

Senator Ringuette: Mr. Barrett, we have an agreement that you will seek the information from SNC-Lavalin with regard to their investment in innovation, current and potential future.

My other question is: Have you looked into analyzing a comparative scenario of environmental risk with regard to the different potential energy sources that we're looking at, not only in their operation phase or their production phase but in their building phase? Sometimes we look at hydro power only when it is producing. Well, of course, once it's producing, the environmental effect is a lot less than when it is being built. Do you have that kind of analysis?

Mr. Barrett: That is really a first-rate question because it's an area I think we don't talk about enough, that is, essentially, the life-cycle impact, not just the cost but the GHG emissions and the overall environmental impact of an energy source. I do agree that nuclear has to be part of that, but other energy systems have to.

For example, we have had done by Hatch, a Canadian international engineering firm, a study of the lifecycle GHG emissions of nuclear power. Their study shows that it's a very low level. That's why we can say with confidence that the generation of power from nuclear reactors has virtually zero emissions, and that includes the whole lifecycle, if you will, the building of the plants, the operation of the plants and the decommissioning of the plants. It's an important thing to do.

As to the environmental impact, in the nuclear case, we have a very small footprint with the reactor sites. We only have a few of them, really, at the moment. In the future, that may change, but the sites themselves are very compact.

We have an environmental dimension in the waste that's produced. The waste is all accounted for. It's all paid for. It's all managed. It's smaller in quantity than most people think. Again, I've heard people say, "Oh, there must be tons of waste everywhere from the reactors.'' There is not. We've calculated that it would fill six to seven hockey rinks, the main part of the rink, up to the boards, if you took all of the waste over all of the years from all of the sites.

Senator Ringuette: That may be reusable with the new technology.

Mr. Barrett: That may be reusable in the technology. So this is really important.

Are the other energy systems going through the same scrutiny? I'm not sure. You mentioned hydro. That's a very good point. You build a hydro dam — we're seeing this in out in British Columbia at the moment — and not everyone is keen on a new hydro dam because it does have an environmental impact on flora and fauna. You have to take that all into consideration when you make the decision.

Similarly, wind and solar. Nobody talks about the waste impact. What's happening when the first generation of wind turbines and solar panels are finished? Where are they going to go? Who is going to pay for them? Are there toxic materials in them? Yes, there are, rarer than other toxic materials, hazardous. Are they just going to be put in a land dump? We need that. That's a very important question.

Senator Ringuette: Essentially, you have that kind of study for the nuclear lifecycle impact on the environment, but, to your knowledge, we don't have the analysis for the other potential sources of energy?

Mr. Barrett: If it's out there, I'm not so aware of it. But I think you've put your finger on an important addition to our knowledge.

The Deputy Chair: We need to follow up on that because that's a very good point.

Senator Mockler: Mr. Barrett, you did respond to Senator Ringuette's question. In the perspective of who we're competing with, the big boys and the big girls at that table for nuclear reactors, the onus is the impact — and you said it so well — the waste impact, That has to be explained so that we can ensure that the world or Canadians have that technology. I'm prudent in saying this, but when I look at the management and operation of nuclear waste, we will need to reassure the people around the world if we have that technology. It should be at the forefront when we do negotiate our reactors. I don't know if you have comments on it, but you did explain it on the previous question.

Mr. Barrett: Yes, and very briefly: I mentioned that CANDU Energy and SNC-Lavalin are working on the advanced fuels, which is a way of taking the waste, so to speak, the spent fuel, the once-through fuel, however you want to talk about it, from other types of reactors, which would normally be put into storage, and bringing it around and using it again, recycling it and reducing the amount of toxicity and waste. That's innovative.

Senator MacDonald: Heavy water was always a big topic in Cape Breton. We had two heavy water plants built in the late 1960s, early 1970s, highly advanced technology. The next thing you know, they're mothballing them, stripping them down. I assume that all of the CANDU reactors are the new ones. Educate me on this. Do all the reactors in the world use heavy water?

Mr. Barrett: No, just the CANDUs. The pressurized heavy water. The Indians have a version of it, but it's essentially the CANDU technology.

Senator MacDonald: I'm just curious: Where do we get our heavy water now? Where is it produced for reactors?

Mr. Barrett: I believe some of it is produced — I have to be careful here. It used to be produced — may I get back to you on that? I was about to say that there was something on the —

Senator MacDonald: Is it domestic?

Mr. Barrett: Domestic, yes.

Senator MacDonald: Is it domestically produced?

Mr. Barrett: As far as I know, yes.

I should say, I'll try to find the answer.

The Deputy Chair: If you would, that would be great. We really do appreciate it. This has been a wonderful conversation, inspired by your enthusiasm for it and insights on it. You can see how you've engaged us.

I have a couple of quick questions. This is a real layperson's question, but I look at a nuclear submarine, a nuclear aircraft carrier, and I think there are thousands of people living and working on an aircraft carrier right beside a nuclear plant that drives that carrier and all of its electrical works and technical works and so on. Why is it that somebody hasn't just taken one of those and put them into a community and driven, in a distributed way, a localized kind of organic system of power from one of those generators?

Mr. Barrett: I think part of the reason is that that was developed under the military side of the countries that have them, particularly in the U.S. Interestingly, as to that type of technology, Admiral Rickover, who's the father of the nuclear navy in the U.S., really was instrumental in having that become the technology for the first type of power reactors.

When you went into the household, so to speak — outside of the military, civil power for electricity, et cetera — it was based on the light water reactor that came from the military. These were bigger reactors. They were scaled up. Westinghouse and the big firms in the U.S., et cetera, have used that. They went international during the 1970s and 1980s. When they sold reactors, it was that type of technology.

But why did they not come back to a smaller one? The application was seen as a big power plant to provide all this baseload for a very complex and big economy. It was a matter of scale that was more important for civil.

With these technologies, you find in the U.S. that some of them were developed in the 1950s and then kind of put on the shelf because they had no commercial application. It was fun, but was left, and now we look back. They worked on technologies that could really burn and utilize the waste from reactors — what you call a "fast reactor.'' They had the technology all thought out and said, "Okay, we're not doing that,'' and moved on. Now people look back at that and say, "Can we look at that again?''

These questions can come from remote communities or the oil sands. People hitherto didn't worry too much about GHG emissions going up with the use of natural gas in producing steam to get the bitumen out. People realize today that it's a great source of GHG emissions. How do you stop it? What can produce steam without GHG emissions? The big energy need. One answer is nuclear power. It can do it.

I know in Saskatchewan they have looked at that as a possibility for the province. Others think about it. They don't rule it out. They wonder if it would work because they can see an application. I think we're getting into that now — the clean energy file and the need to provide power for water purification in remote communities and mining off-grid. People start to see that more clearly now and wonder what they can use.

The Deputy Chair: One of the concerns about cost of nuclear, and believe me I'm looking at everything we can do to replace greenhouse gas emitting sources, isn't its ongoing cost but the difficulty, apparently, of controlling the cost of construction. Some of this sentiment comes from the difficulty of controlling the cost of upgrading, fixing and maintenance, which we've seen in several projects. Are we getting better at engineering these things when we build them to begin with so that we can control costs and get on budget?

Mr. Barrett: It's a very important insight. Of course, there have been some that have been some delivered right on time and on budget, but people tend to forget about that. Internationally, for sure, in China and South Korea, et cetera, they've all been produced on budget and on time.

There are a couple of very important things. One is that you learn from the experience. What I'm seeing in the refurbishment preparations for Ontario, and this will be key, is that the industry is acutely aware of how important it is to deliver. They know that in Ontario, the Ontario government will say, "If these don't come in on time, on budget, to our satisfaction, we'll not refurbish anymore.'' They call them off-ramps. So it's really crunch time to get this right. They're using innovation to fix all of that, or at least get the high confidence that the delivery will be on budget and on time.

For example, OPG in Ontario has developed a mock reactor that's on site in Darlington. It's being used for practising the refurbishment ahead of time. There's one thing. There's been innovation in robotics and tooling. There have been a number of technical things, but you'd need a technical expert to tell you about them. They're all saying to use their innovation to cut down the refurbishment time and save money. To be on time and on budget, we will demonstrate it, and then the confidence will be restored. That I guarantee.

Senator Ringuette: I didn't want to bring up the subject, but the chair raised the matter of budget and being on time. You related the question to the refurbishing project in Ontario.

The guinea pig for all refurbishment of CANDU reactors in Ontario has been New Brunswick — the entire scenario of on-budget and on-time refurbishing. New Brunswick taxpayers and the government are still required to pay for being the guinea pig for on-time, on-budget probable success in Ontario. How is the association that you represent helping New Brunswick to bear the burden of that first-to-do drawing board?

Mr. Barrett: I'm looking at the history of the refurbishment. I wasn't present at the time to have that deep insight. From what I understand of the refurbishment, there was a human error. Someone made a mistake that was not caught. It was eventually caught — it would be — but instead of stopping right then, the refurbishment process kept going. The mistake was seen. Unfortunately, that mistake affected all of the work that had been done and they had to come back and redo it because the quality and safety have to be letter-perfect. Scrutiny and quality control have that impact. When there is a mistake or something goes slightly off, it has to be monitored, caught and fixed right away. The understanding of that is huge now, because of learning from the Lepreau.

Senator Ringuette: Are you going to help? It was part and parcel of quality control for the current refurbishing project in Ontario. Actually, I find that for the entire industry, it really puts a dent in future potential in Atlantic Canada or elsewhere. That major mistake has to be borne by the taxpayers of New Brunswick for granting a better method of doing things elsewhere.

Mr. Barrett: I would hope that some compensation in recouping the losses you've identified comes through. Because of that refurbishment, there will be longer life for that reactor to produce cheap electricity for people in New Brunswick for a long time. The payoff comes year after year after year. Maybe we'll be sitting here in 10 years, God willing, and we'll find that the price of electricity has gone up in every other jurisdiction but New Brunswick thanks to the CANDU reactor that's producing the cheap electricity.

Senator Massicotte: Let me thank New Brunswick for being the guinea pig for the rest Canada to profit from. We appreciate it immensely. Every morning I wake up and thank you. What's the cost of hydroelectricity per kilowatt hour in New Brunswick, given that bad experience?

Mr. Barrett: I will have to ask the committee if I can come back to you on that.

Senator Ringuette: I'll show you my bill, Senator Massicotte, and then maybe you'll understand — you coming from Quebec.

The Deputy Chair: Thank you very much to all of you. It has been an excellent discussion, Mr. Barrett. We really appreciate your input and thoughtful responses and presentation.

Mr. Barrett: My pleasure.

The Deputy Chair: I'm calling this meeting to a close.

(The committee adjourned.)

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